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Your Quick Guide To Singapore’s Corporate Tax System

Being known as one of the countries that offer extremely attractive tax incentives, Singapore is one of the most “business-friendly” countries to operate any company.

Overview Of Singapore’s Corporate Tax System

Companies based in Singapore are taxed on profits earned in Singapore as well as income earned on foreign land and transferred to Singapore.

Since 2010, the corporate income tax rate has been set at a flat 17%.

It is based on the company’s chargeable income, which is defined as taxable revenues minus permitted expenses and other allowances.

There is no double taxation for stakeholders in Singapore’s single-tier corporate tax structure. The tax a corporation pays on its chargeable income is the final tax, and all dividends distributed by a firm to its shareholders are tax-free.

No Capital Gain Tax

In Singapore, capital gains are not taxed.

Gains on the sale of fixed assets, gains on foreign exchange on capital transactions, and other capital gains are examples of capital gains. This is especially attractive to companies that hold assets in Singapore. Eg. Crypto-holding businesses that are looking to invest for the long run.

Tax exemptions

Although Singapore’s headline tax is at 17%. Effective tax payable usually decreases the rate when companies apply for exemptions, grants and incentives. The following are 2 tax schemes and their eligibility requirements.

Tax Exemption Scheme For New Start-Ups

To be eligible for the scheme:

  • Company’s primary activity cannot be of investment holding.
  • Company cannot undertake property development for sale,investment or both.
  • Company must be incorporated in Singapore.
  • There must be a tax resident of Singapore for that Year of Assessment (YA).
    • If a company’s control and management of its business was exercised in Singapore in the preceding calendar year, it is regarded a Singapore tax resident for that YA.
  • Company must have no more than 20 shareholders for that YA
  • Company must either have 1 shareholder with individual holding of at least 10% of issued ordinary shares or all shareholders are individuals

Tax exemptions details:

  • 75% exemption on the first $100,000 of normal chargeable income*; and
  • A further 50% exemption on the next $100,000 of normal chargeable income*.

The scheme applies to qualifying companies for the first 3 consecutive YAs.

Year of Assessment (YA)Normal Chargeable Income% Amount Exempted From TaxMaximum Tax Exemption for YA
2021 – IncorporationFirst SGD 100,000
Next SGD 100,000
@ 75%
@ 50%
SGD 125,000
2022 First SGD 100,000
Next SGD 100,000
@ 75%
@ 50%
SGD 125,000
2023 First SGD 100,000
Next SGD 100,000
@ 75%
@ 50%
SGD 125,000
2024 – Grant no longer applies
Example of Tax Exemption Scheme for New Start-Ups

If your business is not a new start-up, you will most likely qualify for the next tax exemption – Partial Tax Exemption Scheme

Partial Tax Exemption Scheme For Companies

To be eligible for the scheme:

  • You are not eligible for this scheme if you are claiming the tax exemption for the Tax Exemption Scheme For New Start-Ups above.

The Partial Tax Exemption Scheme is open to all businesses, including limited liability firms.

Tax exemption details:

  • 75% exemption on the first $10,000 of normal chargeable income*; and
  • A further 50% exemption on the next $190,000 of normal chargeable income*.

There is currently no deadline for this scheme and will take effect for each YA.

Normal Chargeable Income % Amount Exempted From Tax Maximum Tax Exemption for YA
First SGD 10,000
Next SGD 190,000
@ 75%
@ 50%
SGD 7,500
+
SGD 95,000
= SGD 102,500
Example of Partial Tax Exemption Scheme

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